Almost all advances in retail banking within the past century or two owe their existence to a leap forward in technology. Think about the ATM, which amazed the world when it appeared in a London suburb in the 1960s. Or mobile point-of-sale devices, which allow micro-vendors to turn hobbies into going concerns. ■ “Technology is everything,” says George Bassous, CEO and CTO for Affirmative Technologies, a payments technology provider based in Palm Harbor, Fla. He identifies real-time payments as the latest technological innovation poised to shake up retail banking—and the whole commercial sector. And yet a paradigm shift of this magnitude relies on a chain of smaller advances, ranging from improved core processing to tokenization and ever-more-reliable network security. ■ Staying abreast of the latest technologies is a “huge challenge,” because, “for most bankers, technology isn’t their primary job,” says Mike Brent, vice president, marketing at FiNet, a payment processing solutions provider in Boardman, Ohio. ■ The timeline on the next few pages captures some of the upheavals bankers have already encountered—and hints at even more seismic changes to come. “Within the last five years, we’ve seen an influx of new technology such as we’ve never seen before,” says Brent. “And the advances are going to continue to come quickly.”
1836 ▼ Pneumatic capsule transportation
With the invention of a pneumatic capsule system for transporting objects through tubes in 1836, Scottish engineer and inventor William Murdoch spawned a new technology in search of an application. Pneumatic capsules were first used for transmitting telegrams, but when the automobile age dawned, American banks embraced the invention so customers could withdraw money and make deposits without leaving their cars. Arguably, drive-up teller windows were the beginning of a shift in branch design that accelerated after the arrival of cash automation technologies, says Anthony Burnett, customer experience director for Level5, a custom design-build and construction company for banks and credit unions. Gone are the days when all of the customer-facing people in a bank branch “interact with the customer across three feet of mahogany,” he says.
With the invention of a pneumatic capsule system for transporting objects through tubes in 1836, Scottish engineer and inventor William Murdoch spawned a new technology in search of an application. Pneumatic capsules were first used for transmitting telegrams, but when the automobile age dawned, American banks embraced the invention so customers could withdraw money and make deposits without leaving their cars. Arguably, drive-up teller windows were the beginning of a shift in branch design that accelerated after the arrival of cash automation technologies, says Anthony Burnett, customer experience director for Level5, a custom design-build and construction company for banks and credit unions. Gone are the days when all of the customer-facing people in a bank branch “interact with the customer across three feet of mahogany,” he says.
1950 ▼ The credit card
In 1950, Diners Club introduced the first universal credit card, a portable payment solution that could be used at numerous member establishments. FiNet’s Brent points out that it was not until payments became integrated for merchants at the back end, allowing the tracking of everything from inventory to total sales, that popular venues like McDonalds and Starbucks began accepting plastic for small purchases. In 2005, Richard Jaros and Monique Steadman of Capital One Financial Corp. filed a patent for instant issuance technology; today, banks with this technology can print cards for customers immediately.
In 1950, Diners Club introduced the first universal credit card, a portable payment solution that could be used at numerous member establishments. FiNet’s Brent points out that it was not until payments became integrated for merchants at the back end, allowing the tracking of everything from inventory to total sales, that popular venues like McDonalds and Starbucks began accepting plastic for small purchases. In 2005, Richard Jaros and Monique Steadman of Capital One Financial Corp. filed a patent for instant issuance technology; today, banks with this technology can print cards for customers immediately.
1967 ▲ The ATM
UK megabank Barclays installed the first ATM in a London suburb on June 27, 1967. Two years later, Chemical Bank unveiled the first ATM in the US at a branch in Rockville Centre, N.Y. “On Sept. 2,” proclaimed a Chemical Bank ad, “our bank will open at 9:00 and never close again.” Stuart Cook, CTO of Buzz Points, an Austin, Texas-based incentivized engagement and revenue platform for community financial institutions, calls the ATM the start of “the quiet revolution of customer experience.” According to Cook, “the humble ATM…was really the synthesis of several emerging innovations,” including computer displays, magnetic stripe cards, algorithms that link an encrypted PIN with a customer’s accounts and networks that interlink a bank account to ATMs across the world. “These network standards were the foundations of the rails that enable the payments ecosystem we know today,” he says. Over time, ATMs have continued to advance. Think of ITMs (interactive teller machines), which launched in 2013 and made it possible for customers to talk with a remote teller via video monitor.
UK megabank Barclays installed the first ATM in a London suburb on June 27, 1967. Two years later, Chemical Bank unveiled the first ATM in the US at a branch in Rockville Centre, N.Y. “On Sept. 2,” proclaimed a Chemical Bank ad, “our bank will open at 9:00 and never close again.” Stuart Cook, CTO of Buzz Points, an Austin, Texas-based incentivized engagement and revenue platform for community financial institutions, calls the ATM the start of “the quiet revolution of customer experience.” According to Cook, “the humble ATM…was really the synthesis of several emerging innovations,” including computer displays, magnetic stripe cards, algorithms that link an encrypted PIN with a customer’s accounts and networks that interlink a bank account to ATMs across the world. “These network standards were the foundations of the rails that enable the payments ecosystem we know today,” he says. Over time, ATMs have continued to advance. Think of ITMs (interactive teller machines), which launched in 2013 and made it possible for customers to talk with a remote teller via video monitor.
By Elizabeth Judd ■ Illustrations by Miles Donovan from the independentbanker
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